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Tesla's Diner, Truck bloat fees, Michigan Missing out - SAI Newsletter 21



 

There are a couple of different holidays going on this week, Children's Day and Dragon Boat festival, so will be short and sweet with this week’s edition. Beijing update. To everyone’s surprise here infection numbers went down for a few consecutive days so Beijing began opening up and when I say opening up I mean, parks, stores, offices, and other non-essential places. We still need to test about every 48 hours but that’s just going to be a part of life here for the foreseeable future. There’s still no urgency to get more people vaxxed (meaning the older citizens) so until more people are, Covid will still linger around in the shadows with outbreaks here and there that will need to be dealt with swiftly but hopefully not severely. For those in Singapore attending the Nomura Investment Forum Asia 2022, I will be a panelist for “The Global EV Landscape: Future of Autonomous Driving” panel discussion on June 8th, 14:00 – 14:50 Singapore time. You can find the detailed agenda here. For those interested in attending virtually, you can also follow the link. Let’s just say that next year, I plan to attend in-person. May sales numbers will be out this week and I am not expecting anything that positive out of most automakers with the exception perhaps of BYD. The good thing is that today is when Shanghai is supposed to officially open back up. Snapshots & videos of people out in the streets hanging out are already popping up on social media so let’s hope for everyone’s sake down there that the worst is behind them …and that here in Beijing, it doesn’t get much worse for us. This is also good news for auto manufacturing as many factories will try to quickly get back online and as quickly as possible try to make up for lost units. The other big news out of China is the huge stimulus checks that are going to be written in order to try to jumpstart the economy and get everything back on track. In particular, the govt has announced purchase tax cuts for vehicles <$45K, both ICE and EV so Q2/Q3 sales numbers could be a mixed bag starting off slow and then taking off towards early Q3. They are making a big move and earmarking about ¥60B ($9B) so that probably points to how deep the trench is that they’re looking to get out of. I also saw that Changan was putting some ‘money on the hood’ to get folks into their showrooms as well so expect other automakers to piggyback off of the tax cuts with their own incentives. Just a brief reminder that when the year started, EV sales had just crushed 2021, hitting almost 3.5M units. Many analysts had hoped to hit 6M units for 2022, that seemed a bit optimistic to me but I thought we could easily hit 5.5M. Now, with the combination of supply chain challenges and Covid working against production and sales, book anything >5.3M units as a win. We are still fairly early in the year as sales are normally backloaded towards the end of the year but I am still uneasy about chances of Covid playing havoc on factory uptimes. Finally, I wanted to plug the latest CEM MAX episode where we get a chance to speak with Omer Kheilaf, CEO & co-founder of Innoviz, which designs and develops LiDAR and perception software for ADAS systems & autonomous vehicles. Omer talks about the early days in the Israeli military, starting Innoviz six years ago, why he is confident that this is the right time to enter the Chinese market, his views on LiDAR competition, technology, the difficulties in achieving mass production, and how Innoviz is tackling these issues with unique approaches. For those interested in understanding not just LiDAR but the life of a startup, getting your first big win, and going from prototype to manufacturing hell, this is a ‘MUST LISTEN TO’ episode. Due to the holiday, we will be moving this week’s China EVs & More Twitter Spaces room to Friday, 06.03 – 9pm EST, Saturday, 06.04 – 9am China local time. For getting a download on all that’s happening in the space. Those that aren’t able to join, the China EVs & More podcast is available wherever you grab your podcasts from. Most of our back pods are posted and the descriptions will be able to tell you what we discussed that particular episode. TESLA - Tesla’s Diner: You heard me right. Elon is looking to experiment with an all-night diner at one of the Tesla charging stations in LA, on Santa Monica Blvd to be exact. I can’t imagine that this would be something that they’d try to expand to too many other locations but having a formal gathering place at some of the more centrally located stations could further enhance branding. I’d check it out even if I didn’t have a Tesla! It’s not much different than charging infrastructure being located next to Starbucks but I see more potential at these Tesla’s Diners. THE MOST INTERESTING THINGS THAT HAPPENED THIS WEEK - DC to charge a ‘truck bloat’ fee for oversized vehicles. This is brilliant! Charging more for vehicles (read: trucks & SUVs) that are heavier AND larger is a no brainer. I generally have no problems with SUVs or trucks, if I were in the US I’d even consider purchasing a hybrid Chevy Tahoe (my sister would give me a family discount so…), but their sizes over the last few years have gotten a bit ridiculous. Take the Cadillac Escalade – that thing is a beast! I think this’ll be just the first domino and we’ll begin to see more and more cities stand up to truck bloat, perhaps not in Texas or Michigan but …initially I was surprised that there hadn’t been one of these taxes already in place, then I kinda answered my own question. IN THE NEWS - Those darn wiring harnesses! Those automakers that were reliant on a wiring harness whose design hasn’t changes in decades found themselves scrambling to secure supply as production seized due to the war in Ukraine. Will they take this lesson and run with it, revisiting how they design, engineer, source and manufacture vehicles to rethink of how to do EVERYTHING for an EV world? Wiring harnesses like these aren’t needed in EVs. This is where legacy auto should just watch a Sandy Munro video, the one where he takes down an EV, it could be a VW (what not to do) or a Tesla (what TO do) in order to address the deficiencies caused by today’s challenges which are different than the challenges of decades ago (which is likely when they re-engineered any major processes). Time isn’t on their side here. If Tesla didn’t have them looking over their shoulders, China EV Inc already has boatloads of cars coming to their shores (the US just after) and they’re ready to join the party too. TRENDING ON SOCIAL MEDIA - Concern for Michigan missing out on some of the big EV investments is real and valid. If recent announcements from Vinfast, Stellantis, Hyundai, and others making large investments for EV & battery manufacturing in places outside of Michigan doesn’t concern folks in Michigan, it should. We won’t win ALL of the battles, but there has to be post-mortems on each of the bids they ‘lost’ to ensure future bids are more competitive. And there will be more, I am hearing about a decent number of Chinese companies wanting to get very aggressive with the US markets which means some of them will be building there within the next 5-7 years. Along with some battery cell manufacturers. A lot will play into where they decide to manufacture, some of it will be out of Michigan’s hands but the state needs to show that we plan on being a player in the future of mobility and that starts with protecting our reputation as the Motor City …even if EVs don’t have motors. INTRODUCING - Allow me to re-introduce myself. Some of you may have heard of Aptera. For those that haven’t, it was a company that tried making an affordable battery electric three wheeled vehicle way back in 2006, when Tesla was just getting off of the ground. They failed to get a vehicle into production but the team that brought you the original are back at it. This time they are making it a solar powered electric vehicle with the same form factor and have already received over 22K orders for this version. Currently in beta testing, will Version 2.0 make it to market? Perhaps, but would this be able to be driven on US roads besides Ford F150s and Chevy Suburbans? Because as is, it wouldn’t stand a chance in any kind of collision. The starting price (~$30K) is right because of the smaller battery but will that need to be reconciled in order to make it road worthy? - Back to the Future: DeLorean reborn. Reborn as the Alpha5 EV with little resemblance to the original save the gullwing doors. It’s quite striking – I like it! But again, this perhaps would’ve been better off making a name for itself rather than trading on someone else’s. For those curious, we should be able to kick the tires on one, at least a prototype of one at the Concours d’Elegance at Pebble Beach in August. BY THE NUMBERS - €500M. That’s how much Rimac has raised from the likes of Softbank, Goldman, and others to continue to expand it’s EV supercar lineup. Rimac, last year took a controlling stake in Bugatti and Rimac’s 1,900hp Nevera EV is about the baddest sports EV on the planet so I can’t wait to see what else comes out of this shop with this new injection of capital. —— This weekly newsletter is a collection of articles we feel best reflect the happenings of the week or important trends that have effects on the automotive and mobility sectors here and in the US, we also provide a point of view that we hope educates and sparks debate. The Sino Auto Insights Team

 

Sino Auto Insights is a Beijing, China-based market research and advisory firm that specializes in assisting companies analyze, strategize, and develop products and services that will shape the future of mobility and transportation. Members of our team have experience working in Detroit, Silicon Valley as well as here in China across multiple sectors and functions as entrepreneurs as well as working at larger companies like Apple, Google, Amazon, GM and FCA, and many others.

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